The cost of cutting costs- a week in the news

Watch any news programme on (nearly) any TV Channel (don’t think BBC Three counts!) and you’re sure to hear about one recurring issue- the economy.

Stupid

In what has been a very busy week, where we could focus on the end of Berlusconi’s reign, or the potential (and please, please let it be the actual) end of Sepp Blatter’s tyranny in FIFA after his ‘astonishing’ denial of racisim in football, the economy continues to dominate the headlines. From the Eurozone crisis  to fuel prices- with double dips in between (I’m talking about recession here, not Berlusconi’s personal life)- as one colleague of mine recently put it- “all we ever seem to hear is doom and gloom”.

We’ve spoken before about the crucial role an economy plays in a country’s stability and prospects. Ultimately, however much a politician wouldn’t admit it, their number one job is to make financial decisions that look after their country’s economy. A happy economy equates to happy citizens, and vice versa. The economy needs to be in a good state in order for the Prime Minister and their government to provide for their citizens! Sadly, the developed world is not a happy place to live right now!

As a teacher, we too are hitting the headlines as the ballot boxes are opened and the votes counted– will we strike over pensions and other changes to our profession? Most probably. As the coalition attempts to reduce the deficit, most of their population complains about it.

Now the purpose of this post is not to personally criticise the people who are deeply affected by this issues. Many people are genuinely feeling the squeeze, as their salary doesn’t stretch as far as it once did. This week, youth unemployment hit a record 1.02 million. The affects of this on people’s lives should not be underestimated.

That being said, I do feel that the government is coming under some perhaps unwarranted criticism. Again, just this week, MPs debated the proposed 3p rise in fuel duty set for January 2012, and the damage this could to to both families and businesses. However, for each penny the government put up fuel prices, they raise in revenue £500m. So scrapping this proposed rise could cost the government £1.5bn. This is a very difficult decision for any government to make- look after people now or think about what could be called “the greater good!”

However, amongst the mainstream population, there seems to be either a lack of understanding of what the government is trying to do, or a sense that what they are doing is wrong. They are committed to reducing the deficit. They are committed to doing this, despite the sacrifices that may be asked of people. This is painful, but for the large part, seemingly necessary.

Stupid

I’m no economic expert (a C grade at A-Level hardly qualifies) but put simply, if we continue to live beyond our means, as we have for so many years, then we will follow Greece, Portugal, Ireland and Italy into world of bailouts. To see protestors with signs and placards that say “no cuts” astounds me. What other option is there? The economy is naturally contracting due to the impact of both the banking and Eurozone crisis. It can’t be artificially stimulated overnight. If the economy can’t grow by itself, then there is no way the income received by the government will rise. If Italy is to require bailing out as expected, then this again will have a detrimental affect on the UK economy. If government income won’t increase, then there is no way that the amount of expenditure seen during not only the Blair and Brown years, but also during the latter years of the Conservative Party in the 1990s, can be sustained. Cuts have to be made.

Sadly, those who feel the burden of these cuts are the everyday citizens, who are to some extent blameless in all of this. Rise in food, fuel and energy bills, combined with pay freezes and job losses all make for a gloomy outlook. But the future alternative- such as the austerity cuts seen in those ‘bailout’ countries- would be far, far worse.

This is not to say that I feel the government have made the right decisions. A focus on the public sector has, in my opinion, gone too far. Their inability to tackle the culprits in the banking sector, whose salaries still reach staggering amounts, is disappointing, even if it is understandable to some extent. The banks have to be dealt with globally, or the results would be even more damaging for the UK. Why are the banks seemingly untouched? Because looking after the interests of the economy means keeping them on side.

So the cost? It will be huge. Any suggestions that the worst is behind us are sadly naive. Families will continue to struggle to make ends meet. Businesses will continue to struggle, and potentially to fold. You only have to look at the new focus in the media on cost-cutting measures like placing kitchen foil behind your radiators or feeding your family the ‘toast sandwich’ to see how people are feeling the pinch.

Stupid

And as we see the “anti-greed” protests first spread, disperse and regroup across the world, we can’t escape the political ramifications of all this economic mess. The violence we’ve seen today not only in Italy and Greece, but even in ‘the land of the free’ show the impact the economic situation is having on a post-modern class consciousness.

For instance, who would win a general election, if one was held tomorrow? No one. Another coalition government would form. And whilst Obama is criticised in the US, potential Republican opponents are almost falling over each other in attempts to press the self-destruct button on their individual campaigns. As chants of “gangster” and “buffoon” rang out, Silvio Berlusconi resigned as Italian Prime Minister… ok so it’s not all bad after all! But, as mentioned in previous posts, economic turmoil always leads to political upheaval- and despite its inevitability, the prospect of such potentially drastic changes leaves us perhaps fearing the worst.

Stupidly funny

Now, without trying to steal from Russell Howard (another BBC Three reference!), is there any real good news out there? Of course there is. We could say that although money does make the world go round, but it doesn’t define us. Finding contentment and a good quality of life does not have to come at a price. We can read of the US senator making a remarkable recovery after being shot in the head last year, or of the young boy cured of a life-threatening illness after an innovative liver implant.

But if you’re looking at the world around us, then don’t expect too much good news. Not anytime soon, sadly.

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